May 28 2024
Statement from Michael R. Bloomberg (UN Secretary-General’s Special Envoy on Climate Ambition and Solutions), Mark Carney (UN Secretary-General’s Special Envoy on Climate Action and Finance) and Mary L. Schapiro (former Chair of the U.S. Securities and Exchange Commission and Head of the Secretariat for the Task Force on Climate-related Financial Disclosures)
We welcome the release of the U.S. Government’s Joint Policy Statement and Principles for responsible participation in voluntary carbon markets (VCMs). These will help increase investment in projects that reduce emissions and help more businesses grow while reducing their carbon footprints. This will boost competitiveness, support job creation, and empower entrepreneurs, farmers, and communities to build a low-carbon future.
Organizations
As temperature records are repeatedly broken, we must pursue all available decarbonization opportunities with urgency if the world is to stay within the rapidly diminishing carbon budget. Investment in the transition to a net-zero economy must rise significantly over the next decade in every economic sector in every country. The early retirement of coal-fired power plants alone will require addressing more than $1 trillion of stranded assets. Far more finance must flow to emerging economies and developing countries and into the conservation and restoration of nature if the world is to meet its climate goals.
Voluntary carbon markets are an essential tool for helping to make that happen. They provide catalytic investment and incentivize action by putting a price on carbon emissions and have the potential to mobilize many times their value by crowding in other forms of transition finance.
When operating effectively, these markets can accelerate the pace of emissions reduction by directing finance from the private sector to decarbonization projects that would not otherwise be funded. International markets can also increase the flow of cross-border capital to emerging markets and developing economies that have vast natural resources and biodiversity that are currently undervalued relative to their climate and ecological importance.
Credits should only be supplied by projects that deliver additional emissions reduction, share the benefits with communities, and respect human rights. We must also ensure that companies buying credits do not delay investments in the decarbonization of their value chains. Market integrity will require the sorts of good practices developed in other types of financial markets to apply to voluntary carbon markets.
Beyond the U.S., major economies are announcing intentions to make progress domestically. This is welcome but global policy coordination is necessary to reap the full benefits of high-integrity voluntary carbon markets. Three fundamental steps need to happen to ensure that carbon markets can deliver the scale of finance needed for the transition, for which the U.S. government’s principles can provide a strong foundation.
Firstly, the G20 must deliver high-level principles for globally integrated, high-integrity carbon markets with clear policy objectives, including domestic decarbonization—as exemplified by the U.S. and others—and their role in supporting decarbonization globally. We must ensure that the principles are inclusive and relevant to the unique challenges and opportunities in emerging markets and developing countries, not just advanced economies.
Secondly, policymakers should adopt common supply, demand, market, and social integrity standards. This work should leverage the Integrity Council for the Voluntary Carbon Market (ICVCM) supply-side standards and labelling, which several countries are already considering backing. To create strong and high-integrity demand, governments should articulate their expectations for companies seeking to decarbonize while using credits as part of their strategy, including how companies make claims related to their use of credits and the disclosures expected. This can build on the stakeholder engagement and technical work already conducted by the Voluntary Carbon Markets Integrity Initiative (VCMI).
Finally, we must also recognize the importance of market integrity to ensure the fair and equitable treatment of participants. We must consider the state of play on data and other market infrastructure required to ensure a functioning global market and where gaps need to be urgently addressed.
We have little time to waste and firmly believe that we must use every tool at our disposal to catalyze greater action, bend the emissions curve, and scale much-needed transition finance....
Read the full news release here
